Oral Answers to Questions

John McDonnell Excerpts

Tuesday 29th January 2019 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

Let me bring the Chancellor back to Brexit. He knows full well the impact that no deal would have on people’s everyday lives. As we have heard, the British Retail Consortium warned yesterday that a no deal would lead to higher food prices, and even to empty shelves. The Government’s own economic analysis suggests a 10% hit to real wages. Knowing all this, would not a responsible Chancellor—a senior member of the Cabinet—stand up to the Prime Minister to insist that she rule out a no deal?

[Mr Hammond]

We are absolutely determined to avoid no deal, but the way to avoid no deal is to deliver a deal. As the Prime Minister has said from this Dispatch Box many times, the choice is stark: do the deal or face no deal or no Brexit. No Brexit would be a betrayal of the democratic decision of the British people, and no deal would be a betrayal of our economic future. The deal is the only way forward that protects our democracy and our economy.

[John McDonnell]

It is a deal that lost in this House by a majority of 230. Just as business leaders were not reassured by the Chancellor’s phone call, I do not think the House will be reassured by his response today. The Bank of England has warned that we are potentially facing an economic crisis even more severe than the financial crisis of 2008. Past holders of his great office of state would have had the strength and authority around the Cabinet table to prevent the Prime Minister from behaving so recklessly. At a time when the country is facing a potential national economic crisis, has there ever been a Chancellor so weak?

[Mr Hammond]

If the right hon. Gentleman believes what he has just told the House, he should get off his backside and get the Leader of the Opposition off his backside, and they should get themselves over to Downing Street to sit down and engage with the Prime Minister so that we can solve this problem in the national interest.

Oral Answers to Questions

John McDonnell Excerpts

Tuesday 11th December 2018 Commons Chamber

[Mr Hammond]

I would be very happy to meet my hon. Friend. My hon. Friend the Exchequer Secretary is the expert on this matter and he might find a meeting with him more fruitful, but either one of us is very happy to meet him.

[John McDonnell (Hayes and Harlington) (Lab)]

Many of the shops and firms located on the high street are represented by the Federation of Small Businesses. Has the Chancellor seen what the FSB has said about the current Brexit position? Its chair has said:

“Planning ahead has now become impossible for a lot of firms as we simply don’t know what environment we’ll be faced with in little more than 100 days’ time…the economic warning signs are now flashing red.”

The Chancellor knew full well in our debate last week that the Prime Minister’s deal was not going to receive the support of the House. Is it not only right that he is straight with her by telling her that businesses cannot face any more uncertainty and that a decision on the deal cannot be delayed and put off until late January, as some around her are suggesting?

[Mr Hammond]

I would be the first to agree that businesses need an end to uncertainty and clarity about the future, but frankly I think that the shadow Chancellor is probably the last person who should give us that lecture, because his policy agenda has been designed to create uncertainty and a lack of clarity for business in the future. What the Prime Minister is doing—absolutely rightly—is making a last attempt to see whether she can get further concessions from our partners in the European Union, which is clearly the desire of this House. She will come back and report to the House when she has done so.

[John McDonnell]

Both sides of the House have to address the seriousness of the situation we face. The director general of the British Chambers of Commerce has said:

“Firms are looking on with utter dismay at the ongoing saga in Westminster”.

Today’s Treasury Committee report is devastating in its criticisms of the way in which the Government have sought to assess options not even on the table. A month ago, the Chancellor committed his support to a deal that guaranteed frictionless trade with the EU. Will he now be absolutely straight with the Prime Minister and tell her that unless she comes back with a deal that does fulfil his promise of frictionless trade, it will not succeed in protecting our economy and could not be supported?

[Mr Hammond]

The right hon. Gentleman can practise his synthetic concern at the Dispatch Box, but the remedy lies in his hands. There is a deal on the table that will end the uncertainty and allow this country to move on, and our polling shows that that is exactly what the British people want. All he has to do is get behind it, vote for the Prime Minister’s deal and we can all move on.

European Union (Withdrawal) Act

John McDonnell Excerpts

Thursday 6th December 2018 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

Next week, we will make one of the most significant decisions that most hon. Members will ever make in this House, and it will impact on current and future generations. So far, hon. Members have ensured that we approach the debate leading to that decision with the seriousness of tone that it warrants—indeed, I think we have seen some of the best of the House over the past few days—and we have to find a way through.

On Wednesday, my right hon. Friend the Member for Leeds Central (Hilary Benn) said:

“My final plea to the House is as follows. Now is the moment to tell each other the truth… No one is going to get everything they thought they would get. No one is going to receive all the things they were told they would receive. All of us are going to have to compromise, and we are going to have to find a way forward that a majority can agree upon.”—[Official Report, 4 December 2018; Vol. 650, c. 802.]

I fully concur with those sentiments, and that is what we are about in this coming period.

I wish to focus on four points—I recognise that a large number of Members wish to speak, so I will be as succinct as possible. My first point, on which I hope we can find widespread majority and common ground across the House, is that we must seek to prevent a no-deal situation occurring by either imposition or default. Secondly—and I say this in as straight a way as possible—it is increasingly obvious that the Prime Minister’s deal is neither politically nor economically acceptable, and neither is it capable of bringing the House or country together.

Thirdly, as the House looks for an alternative, Labour has proposed a plan that we believe could unite the country, by addressing the concerns raised in the referendum campaign while securing the benefits of a close and collaborative relationship with our European partners. That is what we are about. My fourth point is an expression of a worrying concern, given the current state of our economy, about the impact of a bad deal on our communities.

[Angus Brendan MacNeil]

As we know, next week the Government’s deal will go down in flames, whatever putative deal is in the mind of the right hon. Gentleman will get nowhere, and the UK will look down the barrel of no deal or no Brexit. When looking down the barrel of no deal or no Brexit, will he also pick up a microphone, look at the camera and tell the people what he would choose: no deal, or no Brexit?

[John McDonnell]

I would choose what the House is seeking—in good will, I believe—which is a compromise that secures the will of the people while at the same time protecting jobs and the economy. [Interruption.] Government Members shout that that is the current deal, but at some stage in the next few days reality will dawn on people that it is highly unlikely that that deal will secure a majority position in the House. We have to be honest with each other and take this opportunity for an honest expression of views. Not only will the deal not secure a majority in this House, but it is certainly not bringing the country together.

[David Morris]

I am listening with intent to what the right hon. Gentleman is saying, which is very measured. Speaking apolitically and being measured myself, I ask whether he would please consider voting for this deal, so that we can all move on with our lives.

[John McDonnell]

I recognise the valid intent of that intervention, and if the hon. Gentleman will stay the course with me a bit longer, I might be able to respond to it.

[Mr David Davis (Haltemprice and Howden) (Con)]

I, too, welcome the right hon. Gentleman’s approach and the tone and tenor of his opening remarks. I hope that during his speech—perhaps not immediately—he will lay out his criteria for acceptance of whatever the outcome should be, not in terms of his rather artificial six tests, but real criteria in the national interest.

--- Later in debate ---

[John McDonnell]

I think we are all of a common purpose, which is to protect the economy and jobs. The six tests simply seek to hold the Government to their own statements, but I do not want to be dragged into a knockabout about that. We are beyond that now; we are now in a situation where the country expects us to work together to secure a majority.

[Simon Hoare (North Dorset) (Con)]

The right hon. Gentleman’s third point is no different from the approach that the Government have taken, so there is clearly a unanimity there. He started his speech in a serious and sober tone, which is to be welcomed. However, my constituents fear—as do I, and many Government Members—that warm words butter no parsnips and that in his pursuit of political instability through a general election, he is prepared to sacrifice the jobs and economic opportunity that he and I hold dear, on the altar of party politicking.

[John McDonnell]

Let me deal with that. I have with me copies of Labour’s composite motion on Brexit for conference—some of them have Labour party application forms on the back, which might interest the hon. Gentleman. That was a joke—[Interruption.] Not a very good one. At conference, we gave priority, which we have upheld, to securing a deal that will protect jobs and the economy. Only if we cannot achieve that do we have the fall-back position of a general election, but we are striving as best we can to secure the best deal.

[Ian Paisley]

I appreciate the opportunity that the shadow Chancellor has today to outline some of his views on this important matter. During his comments, will he also address the backstop issue and indicate to the House whether the Labour party would drop the backstop and the Northern Ireland protocol altogether? How will he ensure that Northern Ireland is treated fully as an integral part of the United Kingdom going forward?

[John McDonnell]

I will come on to that, but the point we have consistently made is that we would not need the backstop; we want a permanent customs union and a relationship with the single market.

Let me press on. Some, I know, long for a no-deal Brexit. I want to mildly chide the Chancellor because he was among the earliest to set that hare running. In an interview in January 2017, he unwisely promoted the idea of changing our economic model to make our country what was described as a low tax haven off the coast of continental Europe. Some seized on that to provide a vestige of credibility for their campaign to crash out of the EU.

The Government have put the cost of no deal at potentially a staggering 9.3% of GDP. The Bank of England said that a disorderly no-deal Brexit could cause more economic damage than the global financial crash of 10 years ago, with house prices crashing by 14% and unemployment reaching nearly 6%. I appeal to all hon. Members to recognise that we have a duty to our constituents not to allow that to pass. I give this assurance: Labour will not countenance no deal and will work assiduously to avoid it.

Let me also say this. The Government’s threatening Members with the prospect of a no-deal Brexit to engender support for their own deal serves only to reveal their desperation. It is proving to be completely counterproductive.

[Ms Nadine Dorries (Mid Bedfordshire) (Con)]

Would the shadow Chancellor abandon his commitment to remain in the customs union if the backstop were not there and there was an absolute legal requirement for the 27 member states to reach a free trade agreement within the initial transition period?

[John McDonnell]

We believe that a permanent customs union is an essential part of the architecture for the future relationship that will secure our prosperity, and it would benefit the overall economy.

Far from influencing Members to back the Prime Minister’s deal, I believe that the threat of no deal, used in this way, is actually strengthening the momentum to secure an alternative approach.

I move on to the Prime Minister’s deal. It is clear that it is bad for Britain. It does not protect jobs or living standards and would leave this country worse off; it does not even respect the Prime Minister’s own red lines. It risks indefinitely tying the UK to agreements over which we will have no say whatever. It does not include a permanent customs union; it does not protect employment or environmental rights; and it does not deliver a strong relationship with the single market to protect businesses or, crucially, to allow them to plan with any certainty.

[Karen Lee (Lincoln) (Lab)]

I voted remain but my constituency voted leave. This deal is not bringing the House together. It is not bringing Government Members or the country together. Does my right hon. Friend agree that there has to be a better way?

[John McDonnell]

My hon. Friend’s position is the same as mine: I campaigned for remain, but my constituency voted leave. People are looking for a compromise that will work; the problem with the Government’s proposal is that it will not work—and they know that.

I want to get something absolutely clear with the Chancellor. For the millions who work in the financial services, the deal and framework give no clarity on what any equivalence regime might look like. It damages the country politically and, most importantly, economically. We were initially told, and the Chancellor has repeated this today, that we would secure enhanced equivalence. Paragraph 38 of the framework starts:

“Noting that both Parties will have equivalence frameworks”.

Will the Chancellor confirm that an enhanced equivalence deal has been signed already? Enhanced agreement is what we were offered and promised by the Chancellor. There is no reference to enhanced equivalence, only to equivalence. That means greater insecurity for the finance sector, one of the key sectors of our economy.

[Vicky Ford]

Page 9 of the future framework agreement talks about

“suspension and withdrawal of equivalence decisions”

being agreed mutually. That is enhanced equivalence.

[John McDonnell]

With the greatest respect, that is not the definition of enhanced agreement. What we wanted written into any framework was a reference to “enhanced”, but that is not there. It does not give the security that the finance sector was promised.

[Wera Hobhouse (Bath) (LD)]

In this House and across our families and communities, we would love this country to come together and unify. However, does the right hon. Gentleman agree that the vagueness of the declaration on the future relationship is making that entirely impossible? Rather than healing the divisions, it will keep them rumbling on for years and years.

[John McDonnell]

I watched the hon. Lady’s contribution to the previous debate; it was interesting how her words coincided with those of Government Members. The use of the words “best endeavours”, “ambitions” and “sought for” gave such uncertainty that it was impossible for the general public and others to understand the direction in which the Government are going in the long term. I concur with the hon. Lady’s view.

I must press on. It is not just Labour Members who are pointing out issues with the finance sector; Members from all parties are doing so, including some on the Government Benches. That view is backed up by economists of many viewpoints in their assessment of the Prime Minister’s deal—including, it seems, the Government’s own. The official analysis produced last week was far short of what was promised, as we said at the time. It took as its starting point the Chequers proposals, which have long been discarded. In doing so, it failed to live up to the standards of transparency that we should expect when engaging in critical decisions such as this.

Even in what they did publish, the Government admitted last week—as the Chancellor has again today, I believe—that their deal would make Britain worse off. In the closest scenario to the possible deal, we could see GDP nearly 4% lower as a result of the Government’s approach to Brexit. To put that in context, this year that would be around £83 billion. In the long term, the damage is likely to be even greater. Worryingly, the Chancellor described £83 billion being wiped off our economy as a “very small economic impact”. Maybe there will be many “little extras” to follow in future.

[Janet Daby (Lewisham East) (Lab)]

Does my right hon. Friend agree that the public’s view is that the economic impact of the deal is too high a price to pay? How does my right hon. Friend view that?

[John McDonnell]

What has happened is clear: the deal has not convinced the Government side and certainly has not convinced the people. It has not convinced a majority in the House so far.

The Government analysis estimated that the impact of trade barriers alone could mean an average drop in wages of 3%—£800 a year, in today’s terms. The regional growth impact is worst in our exporting regions such as the north-east and the west midlands. Other organisations have come to similar conclusions. The Bank of England said that GDP would be almost 4% lower by the end of 2023. The National Institute of Economic and Social Research put the damage at £100 billion in real terms.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

Does my right hon. Friend agree that the uncertainty about EU free trade agreements, which currently cover our trade relations with more than 70 countries, is set to be hugely damaging to businesses up and down the country? They are currently worth more than £150 billion.

--- Later in debate ---

[John McDonnell]

Others have said that the knock-on consequences of the uncertainties are catastrophic, and I do not disagree.

Economists from UK in a Changing Europe, working with the Institute for Fiscal Studies, estimated that the public finances could be worse off to the tune of nearly 2% of GDP, which would mean £40 billion if it happened today. There is no way of dressing this up: if the House approves the Government’s deal, every region of the UK—every sector, every household and business—will suffer.

Let me deal with the backstop that was arranged. Remarkably, the Government have published no specific analysis of the consequences and cost of their proposed backstop. We now know from the Attorney General’s advice, which was prised from the Government and they were forced to publish, that there will be new barriers to trade between Northern Ireland and Great Britain, that there will be new barriers to trade between the UK and the EU, and that the backstop could be permanent. I quote directly from the Attorney General’s advice, which says that

“the Protocol would endure indefinitely until a superseding agreement took its place, in whole or in part, as set out therein. Further, the Withdrawal Agreement cannot provide a legal means of compelling the EU to conclude such an agreement.”

[Ms Angela Eagle (Wallasey) (Lab)]

Does my right hon. Friend agree that that kind of arrangement really puts this country over a barrel in the subsequent trade arrangements, because such a time limit weakens our position and makes it far less likely that we will be able to come to a good conclusion?

[John McDonnell]

Yes, as my right hon. Friend the leader of the Labour party pointed out the other day, the timing does put us over a barrel. What is the incentive for the EU in this situation where we have given all the cards to the other negotiators?

So we are now faced with a prospect of new trade barriers and the potential for an indefinite backstop, but we have no assessment from the Government of what this will mean for the economy. Astoundingly, according to the Attorney General’s legal advice,

“for regulatory purposes GB is essentially treated as a third country by NI for goods passing from GB into NI.”

Others have had their say on the constitutional implications of the backstop—a rod that the Government have created for their own back. But the Government’s refusal to include prolonged membership of the backstop in last week’s economic analysis leads us to conclude that either the Government do not know what the effect of remaining in it would be, or if they do, they do not want us to know the cost and economic consequences of an indefinite backstop.

[David Morris]

If we leave under this agreement, we would have free trade. We have two economies running in Ireland at the moment, one with the euro and one with the pound. Does the right hon. Gentleman agree that that would carry on under this agreement because, as we would be leaving the EU, the backstop is an insurance policy or a legal ramification to this agreement?

[John McDonnell]

The backstop could remain permanent. We have had confusion this morning on the advice from the House of Commons Library and the Chancellor about how it could be ended or a transition deal extended in some form. There is absolute confusion at the moment, and we are now undermining the relationship with one of our biggest trading partners as a result.

One organisation, the National Institute of Economic and Social Research, has estimated that by 2030 we could see a £70 billion reduction in national GDP, in 2016 prices, as a result. Once the Prime Minister accepted our argument for a transition period, she argued that it was right because it would mean only one change for British businesses. Now we face shifting from a transition period to a backstop arrangement, and then to a free trade deal. This is not what was promised. We do know, however, what the Chancellor thinks of the backstop arrangement because he has said so:

“I’ve been clear from the outset that I do not like the backstop. I don’t think the backstop is a good arrangement for our economy, I don’t think it’s a good arrangement for our union.”

I fully agree.

[Alex Chalk (Cheltenham) (Con)]

In fairness, the right hon. Gentleman is absolutely right, and it is perfectly legitimate to shine a light on the issue of the backstop, which causes a lot of us concern, but can he help me to understand something? Under his proposal, if the United Kingdom were to remain in a customs union, would there not still need to be a backstop in any event, because we would be outside the single market? Is there not a concern that it does not really solve the issue? I ask that respectfully and in a spirit of inquiry.

[John McDonnell]

I believe that under a comprehensive customs union agreement, it is so much more unlikely that there would be any need for that fall-back position, and we would be able to offer permanency in an agreement rather than something that is a defective insurance policy.

Others may agree with the Chancellor on his initial assessment, and, in that case, I cannot see why this arrangement—

[Mr David Davis]

rose—

[John McDonnell]

Let me press on.

A variety of commentators have criticised the Prime Minister’s proposals, none more scathing than Mervyn King, the former Governor of the Bank of England. Leaving aside his description of the Government’s handling of this issue as

“incompetence of a high order”,

overall he says:

“It simply beggars belief that a government could be hell-bent on a deal that hands over £39 billion, while giving the EU both the right to impose laws on the U.K. indefinitely and a veto on ending this state of fiefdom.”

Many will share the view expressed by Nicole Sykes, the CBI’s head of EU negotiations, which were revealed in an email where she said that there is

“no need to give credit to negotiators I think, because it’s not a good deal.”

Let me move on to my third point, which is Labour’s alternative. I believe that the majority of hon. Members in this House agree that the Prime Minister’s deal is not a good deal. So over the next few days, and possibly—as was hinted at this morning—for even longer, Members will be searching for a way forward. I believe that Labour’s proposals for a new approach to our European relationship offer that way forward. Our European partners will have seen that the Prime Minister’s deal that they reluctantly endorsed has not proved to secure the support it requires in this House or in the country. I believe that they will see the need, now, for a constructive renegotiation if both their and our own economic interests are to be protected in the long term. Indeed, that is what has happened in the past.

Labour’s new deal will secure the economic interests both of ourselves and our European partners. It rests on three posts. Labour would prioritise a permanent and comprehensive customs union—yes, with a British say in future trade deals. We would deliver a strong, collaborative relationship with the single market—and yes, we would guarantee that the UK does not fall behind in rights for workers, consumers and the environment. Labour has always been clear: we respect the referendum result, but we have always said that we want a Brexit that puts jobs and the economy first—and that is exactly what Labour’s approach will do.

[Richard Graham (Gloucester) (Con)]

The right hon. Gentleman said that Labour is looking for a comprehensive customs union agreement in which Britain will have a say in future trade agreements, but if we were in a customs union with the European Union, we would not have a say on future trade agreements. Can he clarify that?

[John McDonnell]

We will have a say in the future of those trade deals in our relationship with the European Union, and it will reflect the size of our economy and its contribution to the European Union overall.

[Antoinette Sandbach]

Will the right hon. Gentleman give way?

[John McDonnell]

Let me press on now.

My fourth and final point is the vulnerability of our economy to a bad Brexit, and, indeed, the vulnerability of so many of our people—the people we represent. The Prime Minister’s deal does not give the certainty our country needs. Even the trickle of muted support from businesses when the deal was first done has now been replaced by a deafening silence. That is because businesses and trade unions alike now understand that under the Prime Minister’s deal we are facing, in 2020, more uncertainty as this Government then decide whether to extend the transition or fall into an unlimited backstop.

If a bad Brexit is forced upon our country, and the economy and jobs are not protected, many of our people who have suffered from eight years of austerity will suffer even more. Indeed, many of us believe that it has been the economic failures of the past and the present that helped to deliver the Brexit vote. I take no pleasure in saying that it was a vote from which the Government seem almost determined to learn nothing. We have an economy that has seen wages grow more slowly than in any other advanced country in the G20.

[Mr Kenneth Clarke]

The right hon. Gentleman started in a welcome tone of offering cross-party collaboration. I was waiting to see what he proposed as the starting point for the Labour party. He spent about 30 seconds on that, in a couple of sentences, and he is now back to attacking the Government and the withdrawal agreement. Am I right in understanding that he essentially agrees with me that we should stay in a customs union and collaborate with our European partners on international trade deals? He talked about us collaborating with the single market, which I do not quite understand. Nowhere in the world is there an open border between two countries unless they have a customs union and regulatory convergence. Is he advocating that? That not only solves the Irish border problem, but eases the economic consequences of leaving the European Union to a considerable extent.

[John McDonnell]

I thank the Father of the House for his intervention. Let me make this clear. First, we want a permanent customs union, and we want to ensure we have a future say in future trade deals that reflects the strength and size of our economy. Secondly, we want a close collaborative relationship with the single market, which we believe we can achieve, but we also want the ongoing protection of regulations on employment, the environment and consumer rights. Those are the negotiations that we wish to undertake—if not in government, as a Parliament.

[Several hon. Members rose—]

[John McDonnell]

I will press on. I think I have been fairly generous in giving way.

[Simon Hoare]

Will the right hon. Gentleman give way?

[John McDonnell]

I think the hon. Gentleman has already intervened twice. That is absolute generosity. I will press on, because I know that many other Members wish to speak.

The Government need to recognise what motivated the Brexit vote. Over time, industries that sustained whole communities around the country have been destroyed or allowed to wither, tearing the heart out of our towns, from fishing ports to mining and manufacturing communities. This week’s report from the Joseph Rowntree Foundation should be a wake-up call to us all. It confirmed that 1.5 million people are living not just in poverty, but in destitution, including 365,000 children. If we are to learn anything from the referendum vote, it is that so many of our people want change, and the decision on Brexit is fundamentally a choice about the kind of country we want to live in.

[Mr Betts]

Does my right hon. Friend agree that, whatever deal we come up with and wherever we move to on Brexit, we need to recognise those left-behind communities and what drove many people to vote leave, and we therefore need a major package of economic and social reconstruction in those areas, to support them?

[John McDonnell]

We need a major package, but one of the key criteria of that package is that it has to go beyond London and the south-east. It has to ensure that we invest in our regions, coastal towns and small towns—not just the cities. It has to bring everyone with us, as the result of a prosperous economy where prosperity is shared by everybody.

Labour has set out our stall. We stand for change, for an economy that works collaboratively and closely alongside our European partners, for an economy that invests in all the regions and nations of the UK, and for higher wages, driven by investment in skills and greater trade union rights. That is what our proposal embodies. I firmly hope that Members will agree to reject the prospect of no deal. Let us accept that the Prime Minister’s deal will not protect our economy and has to be rejected. Let us work together to secure the long-term interests and future prosperity of our country and our constituents.

--- Later in debate ---

[Dr Fox]

No, I answered the question. What I was concentrating on was excoriating the Labour party for the policy that it has set out today—a policy that is delusional because it does nothing that it actually claims it does. To the irritation of the European Union, the shadow Chancellor and his team do not even appear to understand the European law that they are praying in aid for their own ridiculous case.

[John McDonnell]

I say to the right hon. Gentleman: do not judge our ability to negotiate on the basis of the incompetence his party has shown for two years.

[Dr Fox]

Perhaps the right hon. Gentleman can tell the House—I will give him the opportunity—under which articles of a European treaty does the EU allow a non-member to have a say? Under which treaty? [Interruption.] For those Members who cannot lip-read, it appears the shadow Chancellor was saying that he would singlehandedly be able to rewrite EU treaties to be able to accommodate Labour party policy. What a shambles of an approach to a national negotiation.

Let me deal with a couple of other issues that have been raised in the debate.

Leaving the EU: Economic Analysis

John McDonnell Excerpts

Wednesday 28th November 2018 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on the Government’s publication of the economic and fiscal analysis of various Brexit scenarios.

[The Financial Secretary to the Treasury (Mel Stride)]

Today the Government published the analysis of the economic and fiscal effects of leaving the European Union, honouring the commitment we made to the House. It is important to recognise that the analysis is not an economic forecast for the UK economy; it only considers potential economic impacts specific to EU exit, and it does not prejudge all future policy or wider economic developments. The analysis sets out how different scenarios affect GDP and the sectors and regions of the economy against today’s arrangements with the European Union. Four different scenarios have been considered: a scenario based upon the July White Paper; a no-deal scenario; an average free trade area scenario; and a European economic area-type scenario. Given the spectrum of different outcomes, and ahead of the detailed negotiations on the legal text of the deal, the analysis builds in sensitivity with effectively the White Paper at one end and a hypothetical FTA at the other.

The analysis shows that the outcomes for the proposed future UK-EU relationship would deliver significantly higher economic output, about seven percentage points higher, than the no-deal scenario. The analysis shows that a no-deal scenario would result in lower economic activity in all sector groups of the economy compared to the White Paper scenario. The analysis also shows that in the no-deal scenario all nations and regions of the United Kingdom would have lower economic activity in the long run compared to the White Paper scenario, with Northern Ireland, Wales and Scotland all being subject to a significant economic impact.

What the Government have published today shows that the deal on the table is the best deal. It honours the referendum and realises the opportunities of Brexit. [Interruption.] It is a deal that takes back control of our borders, our laws and our money. [Interruption.] Let me be very clear to the House and to those who say that the economic benefits of staying in the EU mean that we should overturn the result of the referendum: to do so would open up the country to even further division and turbulence, and undermine the trust placed by the British people in our democracy. What this House and our country face today is the opportunity presented by the deal: a deal that honours the result of the referendum and safeguards our economic future; or the alternative, the risk of no deal or indeed of no Brexit at all. [Interruption.]

[Mr Speaker]

Order. Somebody said something about “dishonest”. No Member should accuse another Member of being dishonest in this Chamber. I am not quite sure who I heard, but that must not be repeated. This is a disagreement between right hon. and hon. Members, and colleagues must remember that.

[John McDonnell]

The Chancellor promised us that the House would have a detailed economic analysis of the options ahead of the meaningful vote on Brexit. The least we could expect is that, instead of touring the broadcast studios, the Chancellor would be here himself to present an oral statement on the information.

Let us be clear. We are now in the ludicrous position of seeing an analysis produced today on the economic implications of Brexit, which is in fact largely an assessment of the Chequers proposals abandoned months ago. What the analysis produced by the Treasury today shows us is that if a no-deal scenario with no net EEA migration comes to pass—something the Government have recklessly, if incredibly, been threatening—we could see GDP almost 11% lower compared to today’s arrangements. Under the hard Brexit some Government Back Benchers have been promoting, it would be 7% smaller. Only a Chancellor who talks about “little extras” for schools would talk about this kind of effect as being “a little smaller”.

Can the Minister confirm that no deal is not an option the Government will allow to happen? Does the Minister agree that the one thing this document shows is that the deal on the table is even worse than the abandoned Chequers deal? Have the Government done any analysis whatsoever of the actual proposed backstop arrangements and will they be published in advance of the vote in a few days’ time? What fiscal assumptions is the Department making about extending the transition period, given that there may be no limit to what the European Union could ask for in return for such an extension? To be frank, if the Minister’s Government are not prepared to put jobs and the economy first in their Brexit negotiations, is it not time that they stepped aside and allowed Labour to negotiate that deal?

[Mel Stride]

Let me deal first with the point the right hon. Gentleman made about the Chancellor. The Chancellor is of course accountable to this House. He will be appearing before the Treasury Committee on Wednesday to give full account of the arrangements we are discussing today. Indeed, the Prime Minister herself will be appearing before the Liaison Committee.

The right hon. Gentleman raised the Chequers deal and the fact that analysis is being based around that in this paperwork. That is entirely appropriate given that, as he will know, the political declaration suggests a spectrum of possible outcomes for the arrangements. That is why we not only analyse the Chequers proposal, but have a sensitivity analysis around that proposal as well.

The right hon. Gentleman raises the issue of a no-deal scenario. It is the Labour party that is pushing us more in the direction of a potential no-deal scenario by—I have to say it—deciding for its own political reasons to object to the deal we have put forward. To be clear, that deal is good for safeguarding the economic future of our country and it delivers on the 2016 referendum, giving us control of our borders, our money, our laws and ensuring we protect the integrity of the United Kingdom, while allowing us to go out and make future trade deals. This Government are totally committed to achieving that.

Oral Answers to Questions

John McDonnell Excerpts

Tuesday 6th November 2018 Commons Chamber

[Mr Hammond]

Yes, I have a very firm plan to reduce the debt. My hon. Friend will see from the Office for Budget Responsibility forecast published last week that the debt will fall from over 85% of GDP to below 75% by the end of the forecast period. But my right hon. Friend the Prime Minister and I have decided to take a balanced approach, where reducing the debt has to take place in tandem with keeping taxes low, supporting our public services and, probably most important of all, investing capital in Britain’s future.

[John McDonnell (Hayes and Harlington) (Lab)]

There are reports that the Cabinet has been briefed on a possible deal with the EU that includes a customs union that can be ended through a review mechanism at any stage in the future. So after two years of uncertainty, of business holding back investment and of jobs relocated abroad, we are now presented with a fudge that gives no guarantees on a long-term basis of our future trading relationship. Investment in our economy today is the lowest in the G7 and falling. If a customs union with our largest trading partner can be ripped up at any stage, how does the Chancellor expect businesses to have the confidence to bring forward the long-term investment needed to support our economy?

[Mr Hammond]

That was a perfectly reasonable—if a little long—question, but unfortunately, it was built on a false premise. The Cabinet has received no such briefing.

[John McDonnell]

Well, it is interesting, because the Chancellor knows then that a free trade agreement without a permanent customs union will not protect our economy from the damage that a hard Brexit would cause, so to guarantee frictionless supply chains, we need a secure, permanent customs union with the EU. Businesses and workers are looking to the Chancellor to fight their corner, so will he join me and MPs across the House in calling on the Prime Minister to do the sensible thing and agree a permanent customs union that protects our economy, and yes, the livelihoods of millions of our people?

[Mr Hammond]

The right hon. Gentleman and I do not share very much in common, but we do share the desire to maintain frictionless trade between the UK and the European Union to protect British businesses and British jobs. His preferred way of achieving that is through a customs union; the Prime Minister has set out an alternative plan that will ensure that we can continue to have frictionless trade with the European Union. I prefer the Prime Minister’s plan.

Points of Order

John McDonnell Excerpts

Tuesday 11th September 2018 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

On a point of order, Mr Speaker. Whether people agree or disagree with the hon. Member for Bolsover (Mr Skinner), he is respected across the House. I invite the Chancellor to apologise for the personal remarks he made.

[Mr Speaker]

I must say I have never found anything wrong with the hon. Member for Bolsover’s hearing. I think it was an off-the-cuff remark. It probably was not the best chosen, but it is a matter for the Chancellor to judge whether he wants to say anything.

Oral Answers to Questions

John McDonnell Excerpts

Tuesday 11th September 2018 Commons Chamber

[Mr Hammond]

I think it comes back to the same point: it depends if my hon. Friend is buying.

[John McDonnell (Hayes and Harlington) (Lab)]

There are only weeks to go now before a deal has to be agreed with our European partners, but there are still mixed messages coming from Government Ministers. The Foreign Secretary says that crashing out of the EU without a deal would be a

“mistake we would regret for generations”,

the Brexit Secretary says that no deal would bring “countervailing opportunities”, and the Prime Minister says that it

“wouldn’t be the end of the world.”

The Chancellor has a critical role to play in bringing some rationality to this debate. The Treasury has calculated that no deal could result in the UK’s GDP being over 10% smaller. Will he outline, and be absolutely clear to some of his colleagues, what that would mean for jobs, wages, investment and living standards?

[Mr Hammond]

There is no ambiguity at all about the Government’s objective. We want to strike a deal with the European Union based on the White Paper that we have published, which we believe will be good for Britain and good for the European Union. We are devoting all our efforts over the coming weeks and months to securing that deal and protecting the British economy.

[John McDonnell]

The problem is that time is running out, and increasingly people on all sides of this issue are feeling let down, so let me put this to the Chancellor: can we both try to get the message across to the Prime Minister, who continues to insist that no deal is better than—[Interruption.] She continues to insist that a bad deal is better than—[Interruption.] I will negotiate that again, Mr Speaker. She continues to insist that a bad deal is better than no deal. Business organisations are clear. The CBI is warning of a “catastrophe”, the National Farmers Union says it would be “an Armageddon scenario”, and, according to the TUC, a no deal Brexit would be “devastating for working people”. So may I appeal to the Chancellor? He knows the consequences of a no deal scenario, so will he now show some leadership and make it clear to his colleagues that he will not accept it?

[Mr Hammond]

First, I would love to know what it actually said on the right hon. Gentleman’s bit of paper. Let me be very clear to him. I, the Prime Minister and all members of the Cabinet are committed to achieving a deal that protects British jobs, British businesses and British prosperity going forward. That is what we are committed to. He is absolutely right that time is running out. We are working against the clock; we understand that. We will be working flat out over the coming weeks and months to achieve that.

Oral Answers to Questions

John McDonnell Excerpts

Tuesday 3rd July 2018 Commons Chamber

[The Chief Secretary to the Treasury (Elizabeth Truss)]

My hon. Friend is absolutely right. The way in which we will get higher wages is by improving productivity and skills, which is why we are investing in a record level of apprenticeships and the national training partnership.

[John McDonnell (Hayes and Harlington) (Lab)]

As my hon. Friend the Member for West Bromwich West (Mr Bailey) pointed out, the British Chambers of Commerce has said today that its patience with the Government over Brexit is at “breaking point”. Its sense of frustration reflects accurately what trade unions and businesses across the country feel. All the British Chambers of Commerce wants are answers to some very basic questions, so will the Chancellor and those on the Treasury Bench provide some answers today? Post-Brexit, will goods be subject to new procedures and delayed at border points? Will regulation checks on goods conducted in the UK be recognised in Europe? Will firms be able to transfer staff between the UK and the EU as they do now? Above all else, will Ministers stop squabbling and provide some answers to these vital questions?

[Mr Philip Hammond]

It is fascinating to see the right hon. Gentleman posing as the champion of business when he has been attacking and undermining business ever since he got into his current position. Yes, I recognise all the questions he asked. The Cabinet will meet on Friday to set out our way forward in our negotiation with the European Union. We recognise that this is now urgent and that we need to make progress. The right hon. Gentleman mentioned minimising frictions and maximising flexibility for employers in order to protect jobs and investment. We agree with him and the British Chambers of Commerce on all those things, and we will be looking to deliver a Brexit that maximises employment and prosperity in this country.

[John McDonnell]

The Chancellor does not have to worry about others undermining capitalism; the Government are doing a pretty good job themselves.

When the warring factions in the Cabinet meet this weekend, it is the role of Treasury Ministers to bring them into the real world and point out to them firmly the real cost of a no-deal Brexit for jobs, the economy and all our living standards, so will the Chancellor tell us today the Treasury’s latest estimate of the cost of no deal, its consequences for the economy and the potential loss of jobs? Surely it is time for him to show a bit of grit and to make it clear that no responsible Chancellor could remain in a Cabinet that is so recklessly putting our economy at risk through no deal?

[Mr Hammond]

I assure the right hon. Gentleman that I will be setting out for my colleagues, in the privacy of our Cabinet meeting on Friday, the Treasury’s assessment—indeed, the cross-Whitehall economic group’s assessment—of the implications of potential routes forward. However, as the Prime Minister has said, we cannot give a running commentary in public on a matter about which we are in intensive negotiation with our European interlocutors. I have said before, and say again today, that when the time comes for Parliament to vote on our proposed package, I will make sure that all the available material is put into the public domain so that Members of Parliament are properly informed.

Oral Answers to Questions

John McDonnell Excerpts

Tuesday 22nd May 2018 Commons Chamber

[John Glen]

I acknowledge the report of the Select Committee. This Government stand by the rule of law. We do not do random confiscations but, alongside the work being undertaken, work is under way across Whitehall to examine what further steps are necessary. I am eager that we go as far as we can, and we must do so in ways that are consistent with our values.

[John McDonnell (Hayes and Harlington) (Lab)]

I associate myself with the Chancellor’s eloquent words on the Manchester tragedy. I also commend the emergency services that operated on that day.

“The Government cannot afford to turn a blind eye as kleptocrats and human rights abusers use the City of London to launder their ill-gotten funds”.

Not my words but the words of yesterday’s Foreign Affairs Committee report. For eight years this Government have turned a blind eye to the flow of dirty money through the City. Not only have they delayed until 2021 the introduction of a full public register of overseas companies that own UK property but they have refused to introduce the tougher scrutiny and regulation of City flotations that we have demanded, and they have failed to broaden the definition of “politically exposed persons” to include more individuals linked to crime or criminal regimes.

Will the Government do as the Foreign Affairs Committee has demanded and start taking money laundering and tax avoidance seriously by bringing forward the date for the register of overseas companies that own property in the UK?

[John Glen]

We will continue to take these matters very seriously. We will freeze Russian state assets where we have evidence that they will be used to threaten the life or property of UK nationals and residents. As the Prime Minister made very clear in her statement to the House, the National Crime Agency will bring all UK capabilities to bear against serious criminals and corrupt elites. As somebody who has experienced that directly in my constituency in recent months, I stand by the Prime Minister’s statement. There is no place for these people and their money in our country.

[John McDonnell]

That is just not good enough. We were promised a register in 2015, and we are still having to wait another three years. The Government are letting the crooks, the tax avoiders and the money launderers off the hook again. They have failed to introduce and enforce stricter due diligence for companies as registered companies, they have failed to take on the service providers that set up these laundering scheme, and they have refused to legislate to create a new offence of failing to prevent money laundering. Those are all amendments that the Opposition tabled to the recent Sanctions and Anti-Money Laundering Bill. The people of this country are entitled to ask why this Government are soft on tax evaders and money launderers.

There is another issue that has to be addressed today, as highlighted by the allegations against Lycamobile. Will the Government bring forward legislation requiring any political party found to have accepted donations from money launderers and tax evaders to forfeit or return that money?

[John Glen]

Obviously, it is impossible for a Minister to comment on live cases, but we will continue to use powers to disrupt and pursue money launderers and terrorists. We will use the anti-corruption strategy, and my right hon. Friend the Minister for Security and Economic Crime is committed to using the National Economic Crime Centre to pursue those who need pursuing, but we will do so within the rule of law, consistent with the values of this country.

Oral Answers to Questions

John McDonnell Excerpts

Tuesday 17th April 2018 Commons Chamber

[The Financial Secretary to the Treasury (Mel Stride)]

Perhaps I am in need of the gym, Mr Speaker.

I shall take that as an early Budget representation, and my hon. Friend should be aware that we already have various tax-free reliefs in respect of health in the workplace—check-ups, eye tests, the cycle to work scheme, on-site workplace gym membership and welfare counselling. Of course, our soft drinks industry levy has led a number of companies to improve the quality of their products healthwise.

[John McDonnell (Hayes and Harlington) (Lab)]

In advance of today’s debate on Syria, I welcome financial measures to sanction the Syrian regime. According to past Government figures, £151 million of assets belonging to leading figures in the Assad regime in Syria have been frozen by authorities here. Since then, 261 Syrian individuals have been listed as financial sanctions targets in the UK. Can the Chancellor tell the House what the Treasury’s best and latest estimate is of the total value of assets held in the UK by individuals connected with the Syrian regime?

[Mr Philip Hammond]

I do not have a figure for the latest valuation of those assets. Many of the assets in question will be property assets, I suspect, meaning that the values will move from time to time. I can assure the right hon. Gentleman that the Treasury is fully engaged in the process across Whitehall of seeking to deal with unacceptable behaviours of the type that we have seen in Syria. Financial sanctions will remain an important tool in our armoury, whether we are dealing with chemical attacks in Syria or attacks on the streets of the UK.

[John McDonnell]

I welcome the Chancellor’s response, but the problem is that the lack of transparency in our financial system makes it virtually impossible for him to know exactly how many assets linked to such regimes are owned in the UK. It is estimated that more than £5 billion of assets owned by Assad and his associates are being held overseas and, according to international reports, the UK is recouping far less of the corrupt assets owned by individuals linked to the Syrian regime than is being recouped by other countries. For example, assets linked to the Assad regime worth more than half a billion pounds have been not just frozen but seized by the Spanish authorities. So far, no unexplained wealth orders have been used against Syrian regime figures.

The Government promised to give a date for the publication of a register of owners of UK property based overseas back in 2015, but now, three years later, we are told that a register will not be published until 2021. Will the Chancellor bring forward the date for the introduction of what is an essential defence against corruption?

[Mr Hammond]

I think that the right hon. Gentleman is being a little bit harsh on the unexplained wealth orders. The legislation has been in place for only a couple of months, and we will of course look at opportunities to use it. As for his challenge on the date for the registers, I will look into the matter, as he has asked me to do. I will then write to him to let him know the reason for the date that we have set, and whether there is any opportunity for it to be brought forward.

I think that we are all in the same place on this issue. We all want to ensure that London cannot be used as a route for dirty money—for the ill-gotten gains of regimes that are stealing from their people and channelling money offshore. It must be recognised that London is the world’s largest global financial centre, which presents us with some challenges, but we will continue the work.